BAS fined $26m for false research reporting
NEW YORK – The Securities and Exchange Commission (SEC) has settled an enforcement action against Bank of America Securities (BAS) for issuing fraudulent research and failing to safeguard forthcoming research reports concerning analyst upgrades and downgrades.
BAS will pay $26 million in disgorgement penalties and agree to a censure and a cease and desist order. The SEC found that BAS experienced a breakdown in internal controls to detect and prevent misuse of its research reports by the firm and its employees between January 1999 and December 2001.
Despite BAS sales and trading employees knowing of forthcoming research changes involving upgrades and downgrades, BAS failed to provide clear guidance regarding the handling of the research, and on at least two occasions traded before the research reports were issued. The SEC also concluded that BAS failed to address conflict of interest issues that compromised the independence and integrity of its analysts.
BAS will henceforth retain an independent consultant to conduct a review of the firm's internal controls and prevent the misuse of information regarding forthcoming research reports.
BAS neither confirmed nor denied the Commission's findings.
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